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Factors that Affect Home Financing Approval

Factors that Affect Financing Approvalcalculating finances for new home purchase in New Jersey

When you work with Gloria Nilson & Co. Real Estate, to find Manalapan, NJ real estate, you know we will be able to help you find your dream home. But what happens once we found a home that has everything you want and is in the perfect location? The next thing you are going to face is the loan approval process. Here is everything you need to know about the financial approval process and what you can do to improve your chance of success, if you didn’t get the approval you needed the first time around.

  • Debt to Asset Ratio: One of the first things a lending institution will look at is your Debt to Asset Ratio. They want to make certain that you have the flexibility in your available income to take on a house payment. Each lender has their specific limitations on how much debt is acceptable. If your home loan gets rejected because your debts are too high, it is time to buckle down and reduce your debts. Living frugal for a year can help you pay off credit card debts. If your car payment is more than your future house payment, you might want to consider downgrading to a more cost reasonable car.
  • Credit Rating: Your credit rating is probably the first thing a lending institution will pull up when you are applying for a loan. If your credit score is above 750, the chances are high that you will be approved. Having a lower credit score doesn’t mean you will be automatically rejected, it just means that your lender is going to look deeper into your financial history. If your credit score is lower than 660, most lenders will consider you a high risk borrower and you will find that it is much more difficult to get a loan. If you have a low credit score, you can fix it, but it is going to take time and dedication. Keep your credit card balances low, and make certain that you never miss a payment. Missed payments are big red flags and they will affect your credit rating. If it helps, create a calendar to make certain you are making your payments on time.
  • Proof of Employment: Saying you have a job won’t be enough for a lending institution. You will need to provide copies of your paystubs or a W2. Some institutions want to see that you have held down a steady job and may request a history of paystubs. The best way to stay safe on this item is to have good records. If you get paystubs in the mail, don’t throw them away. Keep them around for at least two years.

Gloria Nilson & Co. Real Estate

If you have any questions about buying or finding a home, our sales associates have the answers you need. For Manalapan, NJ real estate, Gloria Nilson & Co. Real Estate is your source for superior service. It is our mission to give you the home buying experience you deserve. 


Published August 9, 2017 in Buying